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MORAN TOWING & TRANSP. CO. v. CONNERS-STANDARD MAR

January 17, 1963

MORAN TOWING & TRANSPORTATION CO., Inc., as Assignee of Time, Inc., Owner of BARGE C. L. STILLMAN, Libelant,
v.
CONNERS-STANDARD MARINE CORPORATION, Respondent



The opinion of the court was delivered by: BRYAN

This suit in admiralty was tried before Judge Murphy who found respondent Conners-Standard Marine Corporation (Conners), as owner of the tug Gramercy, solely at fault for damages sustained to the Barge Stillman, owned by Time, Inc., the assignor of libelant Moran Towing & Transportation Co., Inc. (Moran) by reason of the grounding of the Stillman in the Erie Canal on June 6, 1956. See 189 F.Supp. 955 (S.D.N.Y.1960). An interlocutory decree was entered on March 2, 1960 adjudging that Moran, as assignee of Time, Inc., recover from Conners the damages sustained by the barge, together with interest and costs. The decree was affirmed on appeal and rehearing denied. See 285 F.2d 368 (2 Cir. 1960).

The decree referred the matter to a Special Commissioner to ascertain and compute the amount of such damages and to report thereon to the court. The substituted Special Commissioner filed his report finding that the damages suffered amounted to $ 32,794.60 and recommending that a final decree be entered in favor of Moran in that sum with interest on various portions of the amount from several dates in 1956 and 1957 when the respective bills for surveys and repairs were paid.

Respondent Conners now brings on for hearing, pursuant to Supreme Court Admiralty Rule 43 1/2 and Admiralty Rule 25(d) of this court, exceptions to the report of the Special Commissioner.

 In essence the exceptions are to the effect that the Special Commissioner erred because: (1) he failed to admit proof offered by conners concerning the transaction by which the claim of Time, Inc. was assigned to Conners; (2) Moran is barred from recovering damages on this claim because the assignment is in violation of § 275 of the New York Penal Law, McKinney's Consol.Laws, c. 40 and Moran is entitled to recover only the sum of the State; and (3) in any event Moran is entitled to recover only the sum which it paid its assignor, Time, Inc., for the assignment, and is not entitled to interest beyond the date of that payment.

 While Conners' exceptions do not so state, Conners also now contends that Moran may not recover damages because this court lacks jurisdiction over the subject matter of the suit. This is on the theory that since the suit is brought by an assignee, it is a suit for equitable relief to enforce the assignment and admiralty has no jurisdiction over it.

 The history and background of this litigation are somewhat involved. On June 6, 1956, the Time, Inc., barge Stillman suffered serious damage to her bottom when she went aground in the Mohawk River section of the Erie Canal. The Stillman was being pushed by the Moran tug Harriet Moran and was forced out of the channel and went aground because of what was ultimately found to be the fault of the Conners tug Gramercy which was proceeding with a tow in the opposite direction.

 On September 11, 1957, Time, Inc., assigned to Moran its claim against Conners for damage to the Stillman in consideration for the payment of $ 31,996 which represented the bulk of the cost of repairs to the barge by reason of her grounding and certain surveys made in that connection.

 On November 14, 1957 Moran, as assignee of Time, Inc., instituted suit for damages on the claim in this court. As has been noted, on the trial the respondent Conners was found solely at fault, the interlocutory decree adjudged that Moran should recover from Conners the damages sustained by Time, Inc., its assignor, to the Stillman and this decree was affirmed by the Court of Appeals.

 No questions as to the jurisdiction of the court or the validity of the assignment were raised by respondent Conners at the trial or on the appeal from the interlocutory decree to the Court of Appeals, though the libel, filed some five years ago, shows on its face that Moran was suing as assignee and respondent's interrogatories over four years ago sought details regarding the assignment. The assignment was introduced at the trial before Judge Murphy without objection from Conners.

 Subsequent to the affirmance by the Court of Appeals of the interlocutory decree establishing liability, Conners for the first time raised the contention that Moran was not entitled to enforce its claim because the assignment was champertous under § 275 of the New York Penal Law and that suit brought upon it was barred since it was in violation of the public policy of the State of New York. This contention was raised in an action brought by Conners against Moran in the Supreme Court, New York County, to restrain Moran from further prosecution of the suit in this court on that ground. A motion to dismiss the State Court action was granted by Special Term on April 3, 1961 and the Appellate Division, First Department, unanimously affirmed. (14 A.D.2d 679, 219 N.Y.S.2d 946 (1961)). In the meantime proceedings before the Commissioner for assessment of damages had been stayed by this court pending determination of the appeal to the Appellate Division.

 After the New York action had been finally decided against Conners, it moved before Judge MacMahon of this court for leave to amend its answer to the libel so as to assert the illegality of the assignment on the ground that it was champertous under the New York Penal Law, to take libelant's deposition and to place the suit on the admiralty trial calendar. On December 28, 1961 Judge MacMahon denied Conners' motion in the exercise of his discretion, holding that Conners had slumbered on its rights and was guilty of laches.

 The hearing before the Special Commissioner on the question of damages then proceeded. Moran put in its case on damages. Conners offered no proof on that subject. However, despite Judge MacMahon's ruling, Conners sought to introduce evidence before the Special Commissioner on the question of the alleged illegality of the assignment as champertous under the New York Penal Law. This testimony was excluded by the Commissioner upon the ground that the scope of the reference directed by the interlocutory decree was confined to damages and that such evidence was not relevant on that question.

 The exceptions to the Commissioner's report are based, in substance, on his exclusion of this evidence and his failure to find that Moran was not entitled to damages because of the illegality and champertous nature of the assignment.

 The question of the subject matter jurisdiction of the admiralty court to entertain a suit based on the assignment, as far as I am able to ascertain from the record, has been raised before me for the first time at this ...


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